To be eligible for a Chapter 7 bankruptcy, a person must be able to prove their debts are not manageable given their current income and resources. This is accomplished via a process known as means testing.
How Means Testing Works
Every person who files a Chapter 7 case must file a document called Statement of Current Monthly Income and Means Test Calculation. This document, when completed and filed, shows the person’s current monthly income and the current monthly expenses that the person is allowed to claim. The person may also be questioned about his or her income and expenses at the meeting of creditors.
From these sources, a person’s current monthly disposable income is calculated. This figure is then used to determine the amount of the monthly payment that the person can afford to make to his or her unsecured creditors. If the amount of this monthly payment is above a certain figure, the person will almost always be disqualified from maintaining a Chapter 7 case.
When a person does not pass means testing, the case will be dismissed or, with the person’s consent, converted to Chapter 13 bankruptcy filing.
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If you are struggling with high debt, Steffens Law Accident Injury Lawyers can help. Our bankruptcy attorneys can explain Nebraska's Chapter 7 means testing, help you determine if this is the right choice for you, and advocate for your interests throughout the filing process. Call today to schedule a case review.